Evidence from Housing Transactions
Old Dominion University
Cornell University
West Virginia University
University of North Carolina at Charlotte
Economists often estimate WTP for urban amenities by using changes in housing prices. School quality and housing is an often studied relationship.
Using data from the Chicago public schools, we estimate that serious cases of teacher or administrator cheating on standardized tests occur in a minimum of 4–5 percent of elementary school classrooms annually. (Jacob and Levitt 2003)
How does grade inflation or, more explicitly, cheating factor into this? To explore this, we study a late 2000s cheating scandal in Atlanta.
Criterion-Referenced Competency Tests (CRCT) has three pass levels:
Teachers and administrators were placed under extreme pressure to meet certain CRCT standards. Meeting standards meant bonuses while failing to do so meant termination.
To measure cheating, the state employed an “erasure” analysis. Calculate the \(z\)-Score of the number of wrong-to-right erasures in a grade-subject-class; \(z > 3\) indicates the classroom is cheating.
| Georgia | APS | |
|---|---|---|
| Clear of Concern | 80% | 23% |
| Minimal Concern | 10% | 8% |
| Moderate Concern | 6% | 18% |
| Severe Concern | 4% | 51% |
APS accounts for over half of the 4% of severe cases.
Most studies estimate:
\[log(\text{Price}_{ist}) = X_{it}\beta + \gamma_1\widehat{\text{Pass}}_{st}+ \epsilon_{ist}\]
We can only observe \(\widehat{\text{Pass}}_{st}\) and \(\text{Erasures}_{s,t\in2009, 2010}\)
\[log(\text{Price}_{ist}) = X_{it}\beta + f(\widehat{\text{Pass}}_{st}, \text{Erasures}_{s,t=2009}) + \epsilon_{ist}\]
We control for square footage, and include FEs for bedrooms-by-bathrooms, 0.5-mile grid cells, school year, and indicators for distressed transactions (REO / short sales).
| (1) | (2) | (3) | (4) | (5) | |
|---|---|---|---|---|---|
| Pass Rate | 0.216 | 0.157 | -0.336* | 0.424 | |
| (0.161) | (0.175) | (0.164) | (0.302) | ||
| Pass Rate x Post | 0.894*** | 0.700*** | 0.763*** | 0.570*** | |
| (0.109) | (0.109) | (0.104) | (0.158) | ||
| '09 Erasures | -0.205 | -0.282* | |||
| (0.125) | (0.127) | ||||
| '09 Erasures x Post | -0.478*** | -0.187** | -0.305*** | -0.566 | |
| (0.045) | (0.057) | (0.058) | (0.474) | ||
| Pass Rate x '09 Erasures | -1.349* | ||||
| (0.660) | |||||
| Pass Rate x '09 Erasures x Post | 0.180 | ||||
| (0.582) | |||||
| Num.Obs. | 15535 | 15535 | 15535 | 15535 | 15535 |
| School FEs | N | N | N | Y | Y |
| R2 | 0.857 | 0.857 | 0.858 | 0.862 | 0.862 |
Union College (2024)